Equities Register Inconsistency as NSE 20 Declines by 0.9 Percent

During the past week, the equities market at the Nairobi Securities Exchange (NSE) recorded a mixed performance with NASI and NSE 25 gaining by 0.3 percent and 0.4 percent, respectively.

NSE 20, on the other hand, declined by 0.9 percent. The YTD performance of NASI gained 3.8 percent as NASI 20 drops 6.8 percent. NSE 25’s YTD performance also slumped by 0.3 percent.

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In retrospect, KCB, Standard Chartered Bank of Kenya, and Safaricom recorded gains of 7.4, 2.9, and 1.7 percent, respectively. These gains in these cap stocks largely influenced the performance of NASI.

However, NASI’s share value was also weighed down by declines in NIC Group, Bamburi, EABL and Co-operative Bank, which recorded declines of 5.1, 4.9, 3.4, and 3.4 percent, respectively.

Equities turnover declined by 22.9 percent during the week to 24.9 million US Dollars, from 32.3 million dollars the previous week, taking the YTD turnover to 629.5 million dollars.

Foreign investors remained net buyers for the week, with a net buying position of 5.2 million dollars, a 37.0 percent increase from a net buying position of 3.8 million dollars the previous week.

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The market is currently trading at a price to earnings ratio (P/E) of 11.2x, 16.0 percent below the historical average of 13.4x, and a dividend yield of 5.3 percent, above the historical average of 3.8 percent.

Nevertheless, there is still value in the market and as Cytonn Investment’s Weekly Report notes, the current P/E valuation of 11.2x is 15.7 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 35.2 percent above the previous trough valuation of 8.3x experienced in December 2011.